Offshore Savings Accounts Tax – When And Where To Pay?
Offshore savings accounts can be a good way to get a better interest rate on the your money, as long as you pay any taxes owed to the US government. Failing to pay any required taxes on these earnings to the IRS can cause a lot of trouble, and even result in criminal charges in some cases. These high yield savings options are located in a foreign country, often where the taxes paid by financial institutions are very small, or in some cases no taxes are levied at all. This allows most offshore savings accounts to offer a much higher interest rate than what is typically found in the United States.
Taxes must be paid to the IRS for any earnings, whether this comes from a highest interest savings account or another account type. If you do not fill out your tax returns honestly then this is perjury, and it applies to omitting information about a foreign bank account. Hiding offshore savings accounts in order to avoid paying taxes on them is a very bad idea. A better choice with these top savings accounts is to fully disclose all the account and earning information on IRS tax form 1040, Schedule B, Part III when you prepare your tax return for the year in question.
Any offshore savings accounts with a balance of ten thousand dollars or more have special IRS reporting requirements in addition to being listed on your tax return. Form TD F 90-22.1 must be filed when your account balance reaches more than the ten thousand dollar limit, and it must be filed when this limit is reached no matter what time of the year it is when this happens. This form must be filed with the Treasury Department whether the account in question is one of the fixed rate savings accounts or it has a variable rate instead. When properly reported for tax purposes offshore savings accounts can be a good way to earn more interest in some cases.